Fair Trade Principles
Fair Wages in the Local Context
Producers receive fair compensation for their products, which means that workers are paid at least that country’s minimum wage. Since the minimum wage is often not enough for basic survival, whenever feasible, workers are paid a living wage, which enables them to cover basic needs, such as food, shelter, education and health care for their families. Paying fair wages does not necessarily mean that products will cost the consumer more. Since Fair Trade organizations bypass intermediaries and work directly with producers, they are able to reduce costs and return a greater percentage of the retail price to the producers.
Fair Trade organizations work primarily with small businesses, democratically-run associations, and/or cooperatives which bring significant benefits to workers and their communities. Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshops conditions, where unprotected workers earn below minimum wage and most of the profits flow to foreign investors and local elites who have little interest in ensuring the long term health of the communities in which they work. By banding together, workers are able to access credit, reduce raw materials costs and establish more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably. Profits are also often reinvested in community projects, such as health clinics, child care, education and training. Workers practice important leadership and organizing skills, enabling self-reliant grassroots-driven development. Safe and healthy working conditions are maintained and producers gain greater control and decision making power over the use of their resources.
Fair Trade organizations engage in environmentally friendly practices which manage and use local resources sustainably. Many FTF members work directly with producers in regions of high biodiversity to develop products based on sustainable use of their natural resources, giving communities an incentive to preserve their natural environments for future generations.
Financial and Technical Support
Small-scale farmers and artisans in the developing world lack access to affordable financing. FTF members that buy products directly from producers often provide financial assistance either through direct loans, prepayment or link producers with sources of financing. Unlike many commercial importers who often wait 60-90 days before paying producers, many FTF members supply prepayment so that producers have sufficient funds to cover raw materials and basic needs during production time. They also often provide other critical technical assistance and support such as market information, product feedback and training in financial management. Unlike commercial importers, Fair Traders establish long-term relationships with their producers and help them adapt production for changing trends.
Fair Trade organizations educate consumers about the importance of purchasing fairly traded products which support living wages and healthy working conditions. By defining Fair Trade and conducting business in a manner that respects workers’ rights and the environment, the Fair Trade movement strives to educate consumers about the often hidden human costs of their “bargains.” By providing information about producers’ history, culture and living conditions, Fair Trade organizations enhance cross-cultural understanding and respect between consumers and communities in the developing world. They also educate consumers and policy makers about inequities in the global trading system.
Respect for Cultural Identity
Fair Trade organizations encourage the production and development of products based on producers’ cultural traditions, as adapted for international markets. They seek to promote producers’ artistic talents in a way that preserves their cultural identity.
FTF members’ finances, management policies, and business practices are open to the public and monitoring by the Fair Trade Federation.